House in multiple occupation (HMO) definition

The Housing Act 2004 clarifies the definition of a house in multiple occupation (HMO), replacing the definition under the Housing Act 1985. The definition of an HMO is found in Part 7 of the 2004 Act.[1]

To be defined as an HMO, a building, or part thereof, must fall within one of the following categories:

• a building or flat in which two or more households share a basic amenity, such as bathroom, toilet or cooking facilities: this is known as the 'standard test' or the 'self-contained flat test'

• a building that has been converted and does not entirely comprise of self-contained flats: this is known as the 'converted building test'

• a building that is declared an HMO by the local authority

• a converted block of flats where the standard of the conversion does not meet the relevant building standards and fewer than two-thirds of the flats are owner-occupied: this is known as a section 257 HMO

A building is an HMO under the standard test if the:[2]

• occupants share one or more of the basic amenities (defined as a toilet, personal washing facilities and cooking facilities) or the accommodation lacks one or more of these amenities

• building does not entirely consist of self-contained flats (it may, however, comprise some self-contained units)

• building is occupied by at least three people who constitute more than one household

• building is the occupants' main residence (or should be treated as such)

• occupation constitutes the only use of the accommodation, and

• rents are payable, or some other form of consideration, for at least one person's occupation

This test applies to the most common type of HMO. It applies to shared houses (shared by more than one household such as students) and purpose-built bedsit accommodation. It may also apply to a hostel if the accommodation does not entirely comprise of self-contained units.

The criteria to meet the self-contained flat test are the same as the standard test, except that they apply to an individual flat that is in multiple occupation.[3]

A unit of accommodation is self contained if it is a separate set of premises, and all three basic amenities are available for the exclusive use of its occupants.[4]

If a building comprises both self-contained and non-self-contained accommodation and there is some sharing of facilities, then the standard test applies.

The converted building test is met where:[5]

• a building or part of a building consists of living accommodation and has been converted, where one or more of the units of accommodation have been created since the building was originally constructed

• it contains at least one unit of accommodation that is not a self-contained flat (there may be some self-contained flats)

• the accommodation is occupied by three or more persons who do not form a single household

• the accommodation is the occupants' main or only residence (or should be treated as such)

• occupation as living accommodation constitutes the only use of that accommodation

• rents are payable

This test would apply, for example, in the case of a house converted to bedsits, where bathrooms and/or toilets are shared.

The local authority can make a declaration that a house is in multiple occupation where it is satisfied that the premises meets one of the three tests above and the occupation of the living accommodation (by more than one household) constitutes a 'significant use',[6] rather than 'sole use', of the property.[7]

An HMO declaration makes it clear that the building shall be regarded as an HMO for the purposes of the Act. The declaration could be used where a hotel taking short-term guests is also providing accommodation for homeless people.

The local authority must serve a notice that the building has been declared an HMO on each relevant person (any person with an interest in the building, or who manages or has control of the building, but not a tenant) within seven days of making the decision.[8]

The notice comes into force after 28 days, which is the period for appeal to the First-tier Tribunal (Property Chamber).[9] If there is an appeal, the notice only comes into effect once it has been confirmed by the Tribunal and the time for appeal against that decision has elapsed (normally 28 days) or the Upper Tribunal confirms the notice.

The local authority may revoke the declaration at any time on its own initiative or on application by a relevant person, where the building no longer meets any of the HMO tests. If the local authority refuses an application to revoke an HMO declaration, this decision can be appealed to the First-tier Tribunal (Property Chamber) within 28 days.

Section 257 of the Housing Act 2004 applies to whole converted properties rather than individual dwellings and describes a HMO as a building:[10]

• which has been converted into and consists of self-contained flats

• where the conversion work did not comply with the appropriate building standards and still does not

• where less than two-thirds of the flats are owner-occupied

The appropriate building standards are those required by the Building Regulations 1991 or 2000 (whichever were in force at the time of the conversion).

Owner-occupiers are those with a lease of more than 21 years or who own the freehold in the converted block of flats, or a member of the household of the person who is the owner.

A building is considered an HMO if it is occupied by more than one household.

The Housing Act 2004 defines a single household as:[11]

• a family, for example a couple (whether married or not and including same-sex couples) or persons related to one another

• an employer and certain specified domestic employees

• a carer and the person receiving care

• a foster parent and foster child

To be an HMO the accommodation has to be used by persons as their only or main residence.

It is usually apparent if this is the case, but secondary legislation specifies certain situations where the nature of occupation is less clear cut. These include:[12]

• a residence for the purpose of undertaking full-time further or higher education

• a refuge, that is a building or part of a building used by a voluntary organisation for temporary accommodation for people who have left their home as the result of domestic violence

• occupation by migrant or seasonal workers where the employer or agent provides the accommodation

• occupation by asylum seekers and their dependents, where the accommodation has been provided under section 95 of the Immigration and Asylum Act 1999 and the accommodation is provided by a private landlord under contract to or on behalf of UKVI

A hostel or night shelter providing accommodation to homeless people may be an HMO because, even if the accommodation is overnight, it is the occupants' only residence. Rent (or consideration) must be paid for the HMO definition to apply.

Certain buildings that meet the criteria to be defined as an HMO under the Housing Act 2004 are exempt from the licensing provisions and the management regulations.

This comprises buildings that are:[13]

• managed or controlled by private registered providers of social housing, a co-operative society, local authorities and other specified public sector bodies

• buildings regulated under other legislation, for example boarding schools, prisons, accommodation centres for asylum seekers and care homes

• occupied by religious communities, unless they are section 257 HMOs

• halls of residence (or other accommodation occupied by students) that are managed or controlled by one of the educational establishments listed in the regulations

• only occupied by an owner/occupier, members of their household and no more than two tenants or licensees. This exemption does not apply to section 257 HMOs

• only occupied by two people who form two households

• properties subject to a temporary exemption notice or an interim management order

The meaning of 'managed or controlled by'

A person is in control of an HMO if they either receive rack-rent or would receive it if the premises were let at a rack-rent. Rack-rent is defined as at least two-thirds of the full net yearly value of the premises.[14]

The rent does not to be a rack-rent if the person is defined as managing an HMO.[15]

In one case, the Upper Tribunal found that where a health service body leased its property to another company in exchange for guardianship services, it did not meet the definition of a person having control of an HMO and the property was not exempt from the HMO licensing regime.[16]

Where an assured or assured shorthold tenant lives in an HMO, the landlord is liable to pay the council tax on the property.[17]

The landlord may recover the money if there is a clause in the agreement allowing for this or they may seek to increase the rent to cover the amount.

If the agreement does not allow for this, the landlord would not be able to increase the rent except in certain circumstances.

Where there is a fixed-term tenancy with no rent review clause the landlord is unable to pass on the cost.

Definition of an HMO for council tax purposes

The Council Tax (Liability for Owners) Regulations 1992 define an HMO for council tax purposes.[18] The definition is mostly the same as the general definition of an HMO, with some exceptions.

A converted property, known as a section 257 HMO, is not classed as an HMO for council tax purposes.[19]

Properties which are exempt from HMO regulations are not exempt from the definition of an HMO for council tax purposes.[20]